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Financial Markets Conduct Act 2013

Governance of financial products - Intervention in debt securities offered under regulated offer or registered schemes - Powers to obtain court orders to intervene

211: Court power to order winding up of scheme

You could also call this:

"The court can close down a scheme if it's not working properly or can't pay its debts."

Illustration for Financial Markets Conduct Act 2013

The court can order a registered scheme to be wound up if you apply to it and it is satisfied that the manager or scheme is insolvent, which means they cannot pay their debts. You can apply to the court if the manager has not followed the law, or if there is no permanent manager or supervisor. The court can also order a scheme to be wound up if it does not meet the requirements to be registered, or if it is fair and reasonable to do so.

If you are the FMA, you can only apply to the court to wind up a scheme if the supervisor has had a chance to do so but has not, or if it is urgent and you need to act quickly, or if there is no supervisor. The FMA is the Financial Markets Authority, which is an organisation that oversees financial markets in New Zealand.

The court can give directions on how to wind up the scheme, and these directions are more important than any rules in the scheme's governing document, which is a document that outlines how the scheme is run, as outlined in the Financial Markets Supervisors Act 2011 or sections 127 to 132.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091231.

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Part 4Governance of financial products
Intervention in debt securities offered under regulated offer or registered schemes: Powers to obtain court orders to intervene

211Court power to order winding up of scheme

  1. The court may, on the application of the FMA or a supervisor of the registered scheme, direct that a registered scheme must be wound up if it is satisfied that—

  2. the manager or the scheme is insolvent; or
    1. the manager has persistently or seriously failed to comply with this Act or any other financial markets legislation; or
      1. no permanent manager is appointed under the governing document or this Act; or
        1. no supervisor is appointed under the governing document or the Financial Markets Supervisors Act 2011 (if required under this Part); or
          1. the scheme does not meet the registration requirements that apply to it under sections 127 to 132; or
            1. it is just and equitable that the scheme be wound up.

              1. However, the FMA may apply for an order to wind up a scheme only if it is satisfied that—

              2. the supervisor has had a reasonable opportunity to do so but has not done so; or
                1. it is necessary as a matter of urgency for the FMA to do so rather than wait for the supervisor to do so; or
                  1. there is no supervisor.

                    1. The court may give any other directions that it thinks fit for the purpose of facilitating the winding up (and, if there is any conflict between those directions and the provisions of the governing document, those directions prevail).